Australia Trade Deficit Widens to Record Level
By Prasanth Aby Thomas | January 8, 2013 4:17 PM EST
Australia's trade deficit has increased to the highest level since 2008 as imports have overtaken exports, but a spike in demand for iron ore could mean that things could get better.
According the Australian Bureau of Statistics (ABS) the deficit widened to A$2.64bn ($2.8bn, £1.7bn, €2.1bn) in November from A$2.4 bn in the previous month, above analysts' estimations of A$2.3 bn. This was the eleventh continuous month of deficit.
Exports rose 1 percent to $24.7 bn in November, but imports jumped 2 percent to $27.3 bn.
But analysts remain optimistic, pointing out that increased Chinese demand for Australia's key export item iron ore had seen the commodity's prices rise from a three-year low in September.
"The marked rise in iron ore values coupled with higher export volumes should give a double boost in December, so this looks like being the worst of the deficits," Michael Workman, a senior economist at Commonwealth Bank of Australia, was quoted by Reuters as saying.
"The deficits could halve from here if prices stay remotely near where they are now."
Concerns on the trade deficit had contributed to the Reserve Bank of Australia's decision to slash interest rates in October and December, taking the total rate cuts to four in 2012.
The bank might look to cut rates further given the economic outlook, but could hold steady if iron ore prices remain firm and China's economic climate improves. China's third quarter growth had remained at 7.4 percent but was widely expected to pick up in the final quarter.
Analysts say that the widening trade deficit is also due to the relatively high levels of the Australian dollar.
"It sort of highlights the fact that the high Aussie dollar is a bit of a drag on national income,'' JP Morgan economist Ben Jarman was quoted by the Australian.
"Because we've had the drag from commodity prices without any offsetting help from the Aussie, that has really exacerbated the weakness.''
The local currency slipped after the report release, trading at $1.0493 from $1.0513 before.
To report problems or to leave feedback about this article, e-mail:
To contact the editor, e-mail:
Most Popular Slideshows
- ‘Sons of Anarchy’ Season 7 Finale Spoilers: Kurt Sutter On Ending The Biker Series And Picking The Right Song For The Final Ride
- Prince Charles’ Wife Camilla Parker-Bowles In Drug Scandal - Reports
- Prince Harry Kissing Mystery Blond, Cressida Bonas & Camilla Thurlow Are Distant Memory
- St. Louis Rams 28, Seattle Seahawks 26 [PHOTOS]
Join the Conversation
- Vatican 2014 Final Synod Report: Gays Still ‘Unwelcome’ in Catholic Church, LGBT Thankful for First Step
- New Zealand Losing $9.4 Billion Every Year to Fraud
- 5 Cities With The Highest Cost Of Living In 2014
- Ebola ‘Cruise Ship’: Holidaymakers Furious Organisers Hid the Truth About Dallas Health Care Worker
- Canada Conducts Practice Drill Of Ebola Rapid Response Teams, To Send Experimental VSV-BOV Vaccine To WHO
- Galaxy Note 4 vs Redmi Note 2 vs iPhone 6: Samsung in Danger with Depressing Q3
- iOS 8 Jailbreak Release Date Likely this October 2014 with Pangu not Evad3rs Firming Up as Creator
- Top 4 Free-To-Download Apps for Fuller iPhone 6, 6 Plus Experience
- Battery Saving Android 5.0 Lollipop Feature Extends The Battery Life Of Your Android Device By 90 Minutes And Displays Orange Bar While Power Saving Mode Is On
- Apple Inc. (AAPL) Stock Set to Soar Beyond $100 Despite Decline After New iPad Launch
- Russia Beefs Up Gold Reserves To Offset Heat of Sanctions And Undercut Dollar
- Australia's 'No Way' Anti-Asylum Seeker Poster Sparks Outrage